Introduction to Negotiation: A Strategic Playbook for Becoming a Principled and Persuasive Negotiator is a 9-week online Yale college course on negotiation techniques taught by professor Barry Nalebuff.
It is often considered as one of the best available resources to learn negotiations.
About The Professor: Barry Nalebuff is a Milton Steinbach Professor at Yale where he teaches negotiation, innovation, and game theory. He is the co-author of six books, co-founder of Honest Tea (a company that has grown organically to over $100 million in sales and was purchased by Coca-Cola). Alongside Honest Tea, Barry advised the NBA in their negotiations with the National Basketball Players Association and serves on the board of Nationwide Insurance. A graduate of MIT, Rhodes Scholar, and Junior Fellow at Harvard’s Society of Fellows, Nalebuff earned his doctorate at Oxford University.
1. The Pie
The pie is how much more two parties can achieve by working together than they can get on their own. According to Barry Nalebuff, you should always calculate the pie. Then, since you’re essential to make that pie, you should get at least half.
2. The BATNA
The terms “BATNA” and “reservation value” are both synonyms for walkaway price. As a seller, don’t accept anything less than your reservation value/BATNA. As a buyer, don’t pay more.
If it helps you to understand the concept of BATNA, ask yourself: “As a seller, what is the least amount I’d be willing to accept before walking away? As a buyer, what’s the most I’d be willing to pay before walking away?”
A psychological principle stating that the first number we hear tends to anchor our perceptions close to that value.
We will see later how that can be used as a negotiation technique.
This is a list of the strategies highlight in “A Strategic Playbook for Becoming a Principled and Persuasive Negotiator”:
1. Claiming Power in the Negotiation: Put Your Foot Down
I originally thought against sharing this one because it’s a strategy suggested by John McCall MacBain that I thought was a terrible idea. However, this is a strategy that was taught to me throughout my studies at a Yale college course, so if the negotiation world really has people who resort to strategies such as this one and you want to arm yourself against bullies over here at The Power Moves, it’s only fair that I share this one so you can keep an eye out for it.
One strategy for dealing with delays is to claim the power in the negotiation by putting your foot down.
You and a journalist are buying out the balance of the equity in a business. The journalist (who is the moral force in the room) keeps delaying things. As a joke, you take his glasses, put them on the floor with your foot hovered above them and say:
You: “Look, let’s get this done. I’ll do the typing because now you can’t see the computer and let me just put my foot here so you just listen, we’ll get these things done.”
You are negotiating in a room with another party that keeps delaying. You ask for the key, lock the room door, put the key in your pocket and say:
You: “Look, this is going on too long. Let’s sit down and none of us leave until we get this done.”
The Other Side: “What are you doing?”
You: “Look, you said you wanted to get this done. Why are you avoiding staying in the room?”
For everyone who wants to be a social charmer instead of an MTU, I strongly advise against this.
2. Argument Flipping (& The Principle of Fairness)
*I coined this strategy “argument flipping” because it has no definitive name, but is reminiscent of the “frame flip” in frame control techniques.
This is a negotiation strategy where you take an argument made by the other side and flip it back on them to your benefit using fairness.
Here is an example from the course:
The Buyer: “Hey, we’re Coca-Cola. For us, eight million isn’t even a rounding error on a rounding error. For you, one million really matters a huge amount. It’s the difference between life and death. Therefore, you should be happy with a million. We’ll take the seven million. Thank you very much.”
You: “Well, hey, Coca-Cola, you just told me you don’t care. Eight million is a rounding error in a rounding error. So, nobody will notice if you don’t even get it. Therefore, since we care so much, we’d like to have the seven million and you can have the one million. And who will notice?”
3. Taking Items Off the Table
It’s important to take items off the table so the negotiation can move forward. In a situation where multiple packages, payment plans, etc. are being negotiated, one strategy to take items off the table is writing each package on a separate piece of paper, holding it up to the other side, and getting confirmation that the information on the papers is correct. After the package has been negotiated, slam it onto the table face down.
Whenever the other side hears the slam, it sub communicates to them that reopening the package for negotiation by turning the paper back over is a bad move that could annoy you, hurt their relationship with you, and prolong the negotiation since they’re now reintroducing a package that had already been negotiated.
*Note: This is a strategy used by John McCall MacBain. If you ask me, this is the strategy that you might see used by your classic MTU, using confidence and physical aggression to reach their goals and top dog positions in their lines of work. If you want to use the MTU style of dominance, go for it. Otherwise, avoid this one.
4. Lie Prevention
To prevent the other side from lying to you, one of the most important things to do is to not ask the other side questions that give them the incentive to lie. For example, say you’re negotiating with your boss:
You: “So, what’s the most you’re willing to pay me?”
Asking for the other side’s BATNA gives them the incentive to lie since, in most cases, they want to pay the least amount possible.
Instead, ask questions that give the other side the right incentives to tell the truth.
You: “Do you prefer distributing pay raises over giving promotions?”
5. First and Final Offer
There are some negotiators that take the approach of offering what they believe to be a generous and fair proposal. After making that proposal as their first offer, they then refuse to budge. This strategy is an ultimatum and it ignores the other side’s expectations for the negotiation since you’re making decisions for them and aren’t allowing them to be more involved in the process. This approach also “lights a fire” which could sour the negotiation and possibly the business relationship you have with the other side.
This ultimatum can be dealt with using “The Hypothetical Offer Tactic”.
6. Never Say No
Never say no.
Instead, let the other side say no to you. You can do this by making an offer the other side might reject, but that you’d be happy to take.
Ex: Imagine you’re unhappy in your job and decide to quit. Instead of just quitting, come up with a package that would entice you to stay. Let the firm say no to you. The worst that can happen is they say no and you leave, but you were planning on doing that anyway. On the other hand, they might say yes.
If the other side says no to a package or deal that you would prefer, encourage them to come up with a package of their own that would entice them to take your deal.
You: “What would it take to get you to be on board with this deal?”
You: “Is there anything I can do to change your mind?”
One way to get power in a negotiation is to put yourself in a position where you can make ultimatums. (Use that power with discretion!)
8. The No Incentive Principle
A fair deal should have an incentive that acts as the motivation for parties to collaborate as opposed to working independently. If there’s no incentive, then there’s no fairness in the deal.
You: “To the extent that you need our help, our cooperation, our effort to make this all work, we aren’t being appropriately incentivized. Whereas under this deal, we’ve got the incentives aligned with the action we want.”
9. The Asymmetric Risk Principle
For a deal to be considered fair, the gains, as well as the risk, should all be fairly distributed.
You: “The risk is all off. The question is, there’s a huge spread between my potential loss and potential benefit, where you are taking little to no risk whatsoever. Now, maybe you shouldn’t take as much risk as me, but I don’t know why it’s all in one party rather than the other.”
10. The Potential Regret Principle
An effective and legitimate principle is the idea of no regret.
You: “We could regret having made the decision to go with this deal if [insert risk that comes with deal] because in that case we are out [insert potential loss]. But under this deal, no matter what happens, whether [insert risk again] works out or doesn’t, we are both still better off having done the deal than not.”
You: “You know, I had the option of making [insert BATNA] and now if [insert risk that comes with deal] doesn’t work out, I’m only going to be at [insert benefit remaining after potential loss]. So, it’s true that if [insert risk again] works out I’ll be up to [insert total benefit after potential gain] and that’s better off. But I will regret having made this decision in the event that it doesn’t work out.”
11. The Principle of Fairness
Fairness is an effective principle to base your principled argument upon and operate as a more strategic negotiator. Barry Nalebuff says that it’s not numbers we treat fairly in negotiations, it’s people. You can use that logic to construct arguments that are harder to counter.
You: “This [insert numeric value of the pie] that might happen if the deal goes through is our incentive to work together. I can’t do that without you and you can’t do that without me. If you like, it takes two hands to make a handshake. So, since we need each other equally to make that happen, I think we should split it equally. 50, 50.”
12. The Hypothetical Offer Tactic
This tactic is a clever way to encourage the other side to work with you to create new options when they’re stuck or focused on only one or two options.
The Other Side: “It’s either going to be package A or package B or the deal is off.”
You: “Well, let’s see. A is $25 million. Would you take $26 million?”
*Of course, the other side would want more money if it’s an option. However, you’re not saying that you’d give them more money, you’re simply showing them that with a little joint problem-solving the both of you could find a better option than just the ones on the table. By doing this, you are able to block their ultimatum and work towards expanding the pie.
*I won’t go too into detail on this because Lucio has some great book reviews that explain anchoring better than I can.
If you have the opportunity to make the first offer, a low bid may help you lower the final price. If you’re selling, a high asking price may help you get more money. This is one of the advantages of going first because the first number people hear serves as an anchor or starting point. Thus, a low bid will drag down your view as to the right starting point and similarly, hearing a high number will pull up your view as to the best asking price.
A couple of quick qualifications to consider before anchoring:
- Starting too low or too high may be counterproductive because your first offer conveys both an anchor and information. If as a seller your asking price is too high, buyers might think you’re out of touch and wouldn’t bother to waste their time by bidding. Conversely, if as a buyer you start with a bid that’s too low, it could demonstrate that you have no idea what the seller’s product/service is worth (or worse, that you do and are trying to steal the product/service from under them.)
- In some cases, a low anchor might help you get a higher price. The reason is that it brings more people into the bidding which helps raise the price.
13.2. Ignoring the Anchor
If you’re on the receiving end and the other side presents you with a low first offer or high first ask, you should be aware of the anchoring effect and consciously counter it.
You: “I think we may be looking at this deal in very different ways. Let’s try and find some common ground by discussing…”
14. Good Cop, Bad Cop
A covert threat that communicates: “If you don’t do this deal with me, you’ll have to face my tough, hard-hitting partner to finish the negotiations on this deal.”
The Other Side: “I think this deal is gonna go more smoothly then it could have because actually, luckily for you, my co-worker who would usually be here to do this deal is actually working another deal. So, she couldn’t be here today and she’s a hard hitter. I am easy-going.”
Calling the other side out on their good cop, bad cop game can start the negotiations off on a bad foot and implicitly letting their covert threat go communicates that you accept their threat (and approve of this power relationship) which puts you in a weak position. So, here’s how Barry Nalebuff recommends handling it:
You: “I guess we’re both lucky. My wife’s not here either even though she’s a pretty hard hitter too, so it’s okay.”
15. The Precise Bid Tactic
A precise number gets a much better response/counter than a rough number because, with precise numbers, people think that you have some logic behind it, some principle that you’ve given consideration and thought to in your ask. Instead, if you’re just putting up rough numbers, the other side thinks you haven’t given great consideration and will respond/counter thinking that maybe you have no idea what your item is worth.
*Quick note for clarification: making a price which is a really round number like $200 will have a much worse response than a precise bid such as $197. A quite strategic way of getting more by asking for less :).
16. Put Out the Fire (Humor Framing): Outrageous Offers
When someone lights a fire, a good way to defuse the situation is to use a little bit of humor while letting the other side know that what they asked for wasn’t appropriate.
You: “That’s great! Where do I sign?”
You: “Just kidding. Because if that’s really what you want, I don’t think a deal’s gonna be possible.”
17. Post-Settlement Settlement
A post-settlement settlement can be used to make both parties happier with the deal they’ve struck.
You: “I’m delighted that you’re happy, my goal is to make us both happier. If I can’t succeed in doing that, fine, we’ll go back to the deal that we both like, so that’s still on the table. But, please give me a chance to see if I can make us both better off because I’m pretty sure that’s going to be a possibility.”
18. Recovering From A Lie: Stop Digging
A good general rule to follow is that when you’re in a hole, stop digging. In other words, adding on more lies or furthering the lie you created only gets you in deeper.
You: “My current salary is $10,000 more than what you’ve offered.”
The Other Side: “Fine, just bring us a current pay stub and we can match it.”
You: “I’m so embarrassed. I feel you were very sincere with me and I didn’t reciprocate. When I told you that my salary was $10,000 more than what you’re offering, I exaggerated. I’m really sorry and I want to apologize to you. I hope you realize that I’ve learned my lesson and that we could still work together.”
There’s a big question of what happens when somebody makes a threat, an ultimatum, lies to you, etc. How should you respond?
So, the question is really, when somebody lights a fire, how do you respond?
1. Fight Fire With Fire
A typical response is, meet fire with fire. The fight fire with fire approach is to basically say, I’ll make a threat back to you.
2. Put Out the Fire (Rational High Ground)
Alternatively, when someone lights a fire, put out the fire.
The Other Side: Delivers a threat.
You: “Do we really want to play that game? I could say the following to you, but I don’t think that’s going to help us get a deal.”
3. Put Out the Fire (Rational High Ground): Analyze Motivations
Sometimes you will find yourself negotiating with people who, for one reason or another, will lie. If they lie about a better alternative to your deal that they (supposedly) have to get you to put your price more in their favor, you can put out the fire by analyzing their motivations to do a deal with you as opposed to simply going with that alternative.
You: “I can only pay up to $450,000.”
The Other Side: “I have another offer of $500,000 [crosses arms and locks eye contact].”
You: [Ask yourself] Why did he come here? If he had another offer and he didn’t think I would go up at all or very little, he wouldn’t even be dealing with me. Why would he rather do a deal with me? What do I have that his alternative does NOT that he wants?
4. Put Out the Fire (Submissiveness): Embarrassment
There’s no referee that yells, “Ready? Negotiation…start!” to let you know that negotiations have begun. So, if you’re the kind of person that likes to go after what they want while getting the best deal possible, you may have to be the one to initiate negotiations.
When the other side tries to embarrass you about the fact that you’re negotiating, negotiation expert Herb Cohen recommends taking a soft tone with a more childlike approach that communicates to the other side you want/need their help.
An example is if you’re in a store and the price tag has already established the price of the product to the cashier, but you’re negotiating the price anyway. By asking for help the way Cohen recommends, you get the other side more involved in the negotiation process.
*Note: If you’ve read Lucio’s articles on frame control, you know that there are more dominant ways around dealing with those who aim to embarrass you that won’t lower your status in the end. I partially disagree with this strategy because while submissiveness can be used to your advantage when you have no real leverage, the extent that Cohen urges his students to behave submissively can actually harm your chances of negotiation success.
5. Put Out the Fire (Rational High Ground): Outrageous Offers/Lowball
When someone makes an outrageous offer or lowballs you, respond with rational questions that invite them to justify their demand. If they can’t justify their demand, it’s worthless.
*Note: Lucio might call this using questions to negotiate frames. Use questions to allow them to clarify their frame so you can persuade them into a more collaborative direction.
You: “I don’t understand how you could come up with that. Could you explain it to me?”
6. Put Out the Fire (Humor Framing) 2: Outrageous Offers/Lowball
To deal with someone who tries to lowball you or gives you an outrageous offer, you can make up a story that invites them to justify their demand (their frame) while putting out the fire.
You: “In a way, I was thinking about what you might come up with. I was thinking as I came over in an Uber and I said, I think he’ll ask for this. No, then on the other hand, I said to myself, no, maybe he’ll ask for this. I had somebody with me, so I asked him what do you think? And we both said…and so when you offered [insert outrageous offer], we were both wrong! I’m in a state of shock, how’d you come up with that?”
Something to consider with this one: this may be good at helping you build rapport since more conversation invites more opportunity to connect, but I would decide against this one.
As Lucio put it, the rules of thumb for social power are:
- Use as little effort as possible to get it done
- Use the most direct response you can afford (going more indirect could underline fear).
This expands a lot of social effort to achieve the same goal that “Put Out the Fire (Rational High Ground): Outrageous Offers/Lowball” does.
7. Handling “We Will Crush You”
As a buyer, one way you can get someone to do a deal with you is by raising your price to make your offer more attractive.
Another way, is by making the idea of rejecting your offer look like a bad idea. In other words, you can work to lower the other side’s BATNA. This can be done through the threat of competition. In this example, let’s imagine that you’re negotiating with a company that wants to buy your company.
The Other Side: “You know, you really, really really should take our offer because if you don’t, what we’re gonna do is we’re gonna come into the market and we are going to crush you, so that your company is going to be worth nothing when we’re done.
You: [Puts out the fire] “We want to have nothing to do with you because if that’s the kind of person you are, frankly, we don’t want to trust our company and the future of this great business that we built to someone who wants to act in that fashion.
While this threat is aggressive, this is a situation where it’s not just what you say, it’s how you say it. In other words, this threat can alternatively be delivered as more of a “fair warning” if it’s coming from a place of positivity and good faith negotiation practice.
For this example, imagine that you own a tea company and Coca-Cola wants to talk about buying your company:
Coca-Cola: “At Coca-Cola, we sold tea—bottled tea—in a joint venture with Nestle, under the brand name Nestea. That joint venture wasn’t working as well as we had hoped and so we’ve ended the joint venture. As a result, we now have a mandate to go and purchase a tea company. Tea is the biggest hole in our beverage portfolio. We’ve looked around the country, around the world, and you are our first choice. So we would like to buy your company and have you be apart of our family. However, if it turns out that we’re not able to get our first choice, we are still going to have to do something because this isn’t a “would like to have”, this is a must have for us. So, we hope that we succeed in doing the deal with you, but at the end of the day, we are going to purchase a tea company.”
See how this still works as a “competition threat” but isn’t so much of a threat as it is a fair warning?
If you were in the position of the buyer, bullying someone into a deal would sour the negotiation and sets up a power relationship that the other side would not appreciate. However, it’s okay to help the other side appreciate the consequences of what it is that’s likely to happen if you don’t reach an agreement.
Negotiation Quick Tips
When you lie, you complicate the negotiations. Admitting you lied or fabricated information creates a whole different series of problems. How can the other side trust anything you say going forward?
You don’t have to be able to read micro-expressions like an expert, but if you aren’t even looking at the person (say, for instance, you have your attention on your phone) then you have no hope of picking up on when the other side may be lying to you. Even if you can’t recognize lies, don’t make it easier for the other side to lie to you. Look at the person. Make eye contact.
Negotiating For A Raise
One of the most typical -and most important- negotiations people will ever face is negotiating for a salary increase.
So I teased out all the best content from Yale’s “Introduction to Negotiation” and came up with a step-by-step guide on how to negotiate for a raise.
- Phase 1: Pre-bargaining. This is when you gather and give information before the negotiation starts.
- Phase 2: The actual negotiation and exchange/proposals which are concluded at the deadline.
- Phase 3: Afterward. (Remember, negotiation is a process which means it goes on and on and most relationships tend to be continuing. There are very few “one-shot” deals.)
Phase 1 – Pre-bargaining
1. Step Zero: Negotiation Preparation
To be successful in negotiating, think carefully about what’s important to you. Maybe it’s money, maybe it’s responsibilities, maybe it’s a title, maybe it’s the ability to get more experience so you can use that to make it to the next level. It’s hard to get your employer to give you what you want if you yourself don’t know what to ask for.
2. Prepare Your Persuasive Motive
You’re a seller. You’re selling the idea of why your employer should give you a raise. It is not really a problem to reveal your motives for selling. However, depending on the reason you give, your employer will be persuaded into a positive or negative reaction. As a side note I thought of while writing this, consider using Simon Sinek’s Start with Why to persuade your employer using a mission or goal you’re working towards:
The course material didn’t have an example, so here is one I came up with:
Your Employer: “If I gave you a raise, what would you do with the additional money?” [Why do you want a raise.]
You: “As a kid I pretty much kept to myself because I always felt like no one truly understood me. Anytime I would watch movies or TV I’d make believe I lived in that world for a bit–I identified with these people and even though I was alone, I was never lonely! People do things on-screen that we are too afraid to do in real life, they share themselves with the world–they are truly brave. I want to reach those people and inspire them to be more brave in their real lives–that is why I’ve committed such a large part of my life to being an actor and storyteller in addition to working here. With the additional money I would be able to move closer to my goal.”
3. “Get Informed”
You don’t want to find yourself in a position where you’re worried that if you say a salary that’s too low, they’ll say yes right away, or if you say a price that’s too high, you’ve started a fire.
- Research the company and the industry.
- Find what’s acceptable to ask for and what’s not (if you’re asking for more than just a raise).
- Position yourself to be allocentric: Learn more about the position that your employer’s in as well as your employer’s interests so you can understand and appreciate them when the actual negotiation starts. Make your best assessment of your employer’s BATNA. In other words, make your best assessment of the most that your employer is willing to pay you.
4. Think Of Negotiation In Phases
The three phases are listed in the bullet summary above. Right now, we’re in phase one.
5. Determine Your BATNA
What is the least you’re willing to accept from your employer?
6. Prepare For Several Scenarios
*”If you wish for peace, prepare for war.” 🙂
Prepare for these situations:
- Your employer agrees immediately to your offer
- Your employer counter-offers
- Your employer starts a fire
7. Get Ready To Leverage Your Lead Time
If you’ve stuck with me so far, know that this is my favorite part of this strategy and why I wanted to write this post for you all. According to negotiation expert Herb Cohen, most people will wait until a week before their boss gives out salary increases to tell their boss that they expect something (and the boss has probably already put the numbers in). They are forgetting that the key is your boss and always will be. It’s about making your boss look good and feel good. So, instead, they should have gotten a commitment from their boss by playing the long game:
1. Step One: Expand the Pie as a First Resort
You go to your boss six months before he’s scheduled to give out salary increases and say:
You: “Look, I really am trying to get a raise. What are the things I have to do in the next six months that would get me an increase in compensation?”
Then, the boss will tell you.
2. Step Two: Prime Their Expectation Level
Three months later you go to your boss again and say:
You: “How am I doing along the way of getting that compensation increase?”
3. Step Three: Close the Deal
One month before the scheduled salary increases you check in with your boss one last time.
Then, on the day of the salary increases, you’ve got it already because you’ve affected the expectation level of your boss and the boss knows. It’s like the boss has promised it to you and you’ve both committed to this process over an extended period of time, so you get it.
However, this doesn’t guarantee your raise will be as big as you might expect or want it to be. That’s why in “Negotiating for a Raise: Phase 2” I’ll be going over how to initiate and properly handle the actual negotiation itself according to Yale University.
Phase 2 – Negotiating a Raise
1. Leverage Various Sources Of Power
During the process of Leveraging Your Lead Time, you should prepare various sources of power as you approach the salary increase date.
1.) The power of the printed word: When information is in print, it leads us to believe that the information is set in stone and cannot be negotiated. For example, if your boss printed a packet and said, “Here it is, from the rule book. Rule six in our company is…,” then out of respect for the printed word you are likely to accept it and forget that the information in that rulebook was at one point discussed and negotiated over. So, see if you can print information of your own to show to your boss that will help you be more persuasive.
2.) The power of competition: In other words, if the other side knows you have options and that they’re not the only buyer/seller they will overestimate your power in the negotiation because you have alternatives to their deal (leading them to underestimate their own power in the negotiation). Try to give yourself alternatives to the deal you want with your employer.
2. Know Your Approach
You should approach your boss in a way that will get him to invest in the negotiation. Here are some sample approaches to consider:
1.) The Relentlessly Pleasant Negotiation Style: A style of negotiation where you are “soft in style, hard in substance”. You have to be relentless in terms of going after what you want (a fair deal) but will have a higher success rate by negotiating in a friendly, cooperative, and collaborative way.
2.) The Liking (by Association) Negotiation Style: One way that “liking” works is that we buy more from those we like. In this case, we want your boss to buy into the idea of giving you a raise. Since you have more power in the negotiation the more you get the other side to invest, by being more likable they will like the idea of doing a deal with you more than if you lie, show a lack of integrity, talk too much, contradict them, or act judgemental.
3.) The Low-Key Pose of Calculated Incompetence Negotiation Style: Make sure you don’t appear to be the smartest person in the room. Never let people know how bright you are or what you’ve accomplished; they should ultimately be able to figure this out after the negotiation is over and after you’ve told them what a great deal they got. Make your boss feel smart. By playing dumb and inarticulate in the negotiation, you get the other side more invested and involved in the process. Train yourself to say:
You: “I don’t know. I don’t understand. Can you explain that to me again?”
Then, you want to ask your boss for help.
You: “Look, you’ve been doing this for years. Could you like help me?”
Get them talking, get them doing, get them involved in the process.
3. Have The Champagne Ready
At the last meeting with your boss one month before the scheduled salary increase, it’s good to have a bottle of champagne very evident and glasses sometimes at the end of the table. That way, your boss knows that there’s a major time element, he must finish up negotiations with you on this deal. You could even bring a card that says “congratulations” and write a note inside congratulating your boss on his good choice.
4. Prepare For A “Breach Of Contract”
You’ve spent months working with your boss to get this raise. For your boss to change his mind or come up with a sudden excuse why he can’t give you the raise anymore would be the equivalent of a breach of contract. When your boss does not negotiate in good faith this way, you can deal with the situation by claiming the moral high ground for yourself and strategically guilt-tripping your employer into a more cooperative frame.
*Note: Personally, I don’t agree with some of the above strategies, including this one. Guilt-tripping your boss is not only manipulative but a good way to get yourself fired if you take it too far like how John McCall MacBain recommends in the example here.
You: “Do you believe in good guys and bad guys?”
Your Employer: “Of course, I wanna be a good guy.”
You: “You really wanna be a good guy in life don’t you?”
Your Employer: “Yes, I wanna be a good guy.”
You: “Well, let’s take a situation. So, I’m a good guy, like you are, and I shake hands with someone saying…However, somebody, can’t be a good guy, a bad guy comes in and says no no…So that person would have to be a bad guy. And you don’t wanna be a bad guy do you?”
Your Employer: “Of course, I don’t wanna be a bad guy.”
You: “Well look, I can help you. The only solution you have to not be a bad guy is to…”
5. Be Allocentric And Expand The Pie As A First Resort
You were allocentric and expanded the pie when you looked out for the interests of your boss by asking, “What are the things I have to do in the next six months that would get me an increase in compensation?” That was the equivalent of saying:
You: “Look, at some point we are gonna be talking about dollars, I know that. And that’s going to be confrontational because you’re always going to want me to accept less and I am always going to want more. But before we get there, let’s talk about what excites you, what motivates you and how I can help make this deal work better for you.”
However, that doesn’t mean you can’t look for ways to expand the pie further by asking questions like this again at the last meeting.
6. Anchor (High) With A Precise Bid
If you have the opportunity to make the first offer, a high asking price may help you get more money. This is one of the advantages of going first because the first number people hear serves as an anchor or starting point. Thus, your boss hearing a high number will pull up his view as to the best price to pay you. (Qualifications to think about before anchoring can be found in this post.)
A precise number will get a much better response/counter from your boss than a rough number because, with a precise number, your boss will think that you have some logic behind it, some principle that you’ve given consideration and thought to in your ask. Instead, if you’re just putting up rough numbers, he thinks you haven’t given great consideration and will respond/counter thinking that maybe you have no idea what you should be paid.
If he accepts, congrats! If not, continue to negotiate for what you believe is fair.
If I had to remind you of one principle, it would be this:
1. Expand the Pie as a First Resort
In negotiations, buyers will sometimes make the mistake of arguing what the seller’s product is worth to be more persuasive in their reasoning for why they believe they should pay less for it. A more productive approach is to start the negotiations off in agreement with the seller on whatever it is they think their product is worth so you can redirect the conversation towards how both of you can make the pie bigger for everyone.
You: “This is what I can do. Work with me and help me to find a way to make this deal possible at the price that I can pay. In particular, I may not be able to pay you as much cash as you like, but what are some of the other things that I can do to help make your life good? What are some of the things that you are worried about in this deal? What are some of the things that excite you about this deal? How can I help relieve you of the worries and increase the level of excitement? And I know, of course, that more cash is always good but what are some of the things besides cash that will make this deal better for you?”
You should seek to expand the pie before butting heads with the other side on just the dollar amounts of the deal. A lot of people look for opportunities to expand the pie as a last resort when there’s no other way of making the deal work. By expanding the pie as a first resort, you accrue the benefit of getting people invested in the negotiation and also help appreciate how big a pie can be created.
You: “Look, at some point we are gonna be talking about dollars, I know that. And that’s going to be confrontational because you’re always going to want me to pay more and I am always going to want to pay less. But before we get there, let’s talk about what excites you, what motivates you and how I can help make this deal work better for you.”
You: “What else can I do besides giving you money that would make your life better? What other ways can I make you happier about this transaction besides just paying more? I know later we’re going to talk about the money and that’s going to be an issue of contention but right now what are things I can do to help make this deal work better for you without necessarily paying money?”
- A Bit Disorganized
My personal feeling is that the course could have done better in terms of how the material is laid out for its students. I spent a lot of time coming up with names for different strategies so it would be easier to spot and remember them because the professor did not provide names for all of the tactics, principles, etc. in the course. I would also come across a certain strategy in one week and then a week and a half later come across the same strategy after we had already covered it and moved on as a class (which can be slightly confusing and annoying).
- Some Risky Suggestions
One example of a risky suggestion the course gives is in the usage of humor. Using a bit of humor to communicate to the other side that their outrageous offer is not appropriate works as a good strategy most of the time. However, I can only imagine how joking that you’re ready to sign a deal would go over with the other side after hours of heated negotiation and social effort. If done improperly or ill-timed, the joke can make you come across as someone who is immature and doesn’t care about the deal or the other side’s time and energy. The last thing you want to do is break rapport and sour a relationship by offending someone this way.
- Lots of Math
Early on in the course, there is a hefty amount of math you have to work through. It was worth it in the end for my understanding of the pie concept, but it felt a bit overdone since most daily negotiations don’t require extensive mathematical knowledge.
- Slightly Unfocused
I took lots of notes on this course. Unfortunately, I spent a great deal of time piecing certain strategies and principles together to make sense of how they all tie together, which took away from the time I could’ve spent learning and is something that I felt should have been done already.
Lots of Genius
This is a Yale course, so I had set my expectations pretty high. And it delivered
Doesn’t Shy Away from the Dark Side of Negotiation
Before taking the course, I didn’t read anything in the course syllabus about the professor covering negotiation threats and how to deal with them, so that was a nice surprise.
I appreciated that there were a lot of video examples of negotiations as well as stories the professor uses to teach how to negotiate by recalling his negotiations as the co-owner of his company, Honest Tea.
I have enjoyed the Yale’s “Introduction to Negotiation”.
However, a large part of me knows that this is more like a well-rounded introduction to negotiation and not the end-all-be-all of training in negotiation and persuasion.
But it’s a great foundation to start from.